Tips for Managing and Paying Back Student Loans
The majority of students graduate college with some debt. According to a May 2023 report from Forbes, around 55% of students who graduated from public and private nonprofit four-year universities had an average debt level of $28,950. The key to working through your student debt quickly is to stay organized. You can take some steps while in college. You can take others after graduating.
Here are some tips for paying off your student loans quickly and with less stress. While you’re in college:
Borrow Only What You Need.
Review your financial aid annually to see how much you actually need to borrow for the upcoming academic year. If you’re offered more than you need, accept only what you need to cover your college expenses to minimize your debt. Be sure you’re using your full eligibility for subsidized federal direct loans. The federal government covers the interest for these loans while you’re in college. Check out subsidized federal loans before considering other loan options.
Pay the Interest.
If you have some extra funds available, paying the interest on your unsubsidized or private student loans while you’re in college (and the loans are deferred) can help reduce how much your student loan debt grows.
Get a Work-Study or Part-Time Job.
It may seem like the cost of college is too large to pay off with the money you earn from a work-study or part-time job, but every penny counts to help manage student loans. Look at your college job board to find gigs you can do while taking classes. Look for work-study-eligible jobs if you’ve been awarded work-study on your financial aid offer. Consider working on campus, waitressing, working at a day care or day camp, doing food delivery, or conducting research. Earning money will help you cover your most immediate college costs and can reduce the amount you need to borrow throughout your college experience. Any additional funds can be put toward paying down your loans.
Contact your financial aid office to discuss your borrowing if you’re in college and you need more help or guidance.
Tips to Pay Student Loan After College.
Whether you’re on a student loan pause or learning to manage a student loan, be sure to:
Review Your Loan Repayment Options.
You’ll have several different repayment options if you’ve borrowed Federal Direct Loans. Your best repayment option depends on a few factors, including income. Use Federal Student Aid’s loan simulator to identify the best repayment plan for you. Based on your career path, check to see if you’re eligible for federal student loan forgiveness programs, such as public service or teacher loan forgiveness. You could qualify for public service loan forgiveness if you work for a government or nonprofit organization. Learn more here.
Create a Budget.
Sticking to a budget may seem obvious, but remembering to do so is the best way for you to stay organized and in control of your finances. Assess your spending habits and fixed costs. Create a plan to save a little each month to pay down your debt. Set up an account designated for paying off your student loans. Doing this will automatically transfer a specific amount of money to savings to control your spending.
Make Larger Payments Whenever Possible.
Reduce the overall payoff time by making additional payments to your principal balance. Cutting down the overall balance will decrease the duration of the loan period and the interest accrued.
Use the Student Loan Interest Tax Deduction.
The federal government offers a student loan interest deduction on your income tax for interest paid during the year on qualified loans. This can equal a deduction of up to $2,500. Make sure to take advantage of this deduction!
Ask Your Employer About Repayment Assistance.
Some employers offer student loan repayment benefits and can contribute money to help pay off your student debt. Companies like Carhartt, Carvana, Peloton, Chegg, Google, and Fidelity Investments offer their employees repayment benefits. Some employers may even provide 100% loan forgiveness. Ask your human resources officer if your company can help with student loans. If they can’t help you, apply to companies that do help with student loans.
After college, contact your loan servicer for help to stay on track as you repay your loan.